Bradley Belt took over the Pension Benefit Guaranty Corp. as big companies began dumping retirement plans on the federal government. Now he's leaving with dire warnings about the private retirement system.

STEVE INSKEEP, host:

On Wednesday's the business report focuses on the workplace, and today we'll focus on what happens when you leave the workplace and retire.

The Federal Reserve Chairman, Ben Bernanke, thinks there are some problems with individual retirement plans. He told a conference of local officials here in Washington that workers do not pay enough attention to their saving and investment choices.

LINDA WERTHEIMER, host:

The Fed Chief also is concerned that too many eligible employees do not participate in company 401K plans. That's despite the tax advantages and employer contributions.

INSKEEP: And, as many of us know, more and ore traditional pensions are going away, and sometimes companies back out of their pension obligations.

For the last two years, Bradley Belt was in charge of the government's pension insurance program, and at every opportunity he was pleading for reform as companies dumped billions of dollars in retirement obligations on his agency. After stepping down last month, he talked to NPR's Frank Langfitt about the future of American retirement.

FRANK LANGFITT reporting:

During Brad Belt's tenure at the Pension Benefit Guaranty Corporation, it was one thing after another.

Here's how it sounded on NPR:

Unidentified Reporter #1 (NPR): This week Verizon announced that it's freezing the pensions of current managers…

Unidentified Reporter #2 (NPR): In addition to the other actions Delphi announced today, it plans to freeze pension benefits for both hourly and salaried workers. The company instead will offer…

Unidentified Reporter #3 (NPR): The bankruptcy court ruling last week that permits United to end its pensions program has angered many workers.

LANGFITT: The Agency had to take over the pensions at United and U.S. Airways, pushing its deficit to more than $23 billion. More defaults could lead to a taxpayer funded bailout, like the one that followed the savings and loan crisis in the 1980s.

Belt blames loose accounting rules that allow companies to spend money elsewhere when they should be saving it for pensions.

Mr. BRADLEY BELT (Former Executive Director of the Pension Benefit Guaranty): There are perverse incentives created to chronically under fund your pension plan. The fact is there are a lot of loopholes. There were companies that were taking so-called contribution holidays for five or ten years; that is not putting any money into their pension plan. You have, frankly, screwy accounting rules.

LANGFITT: Congress is arguing over a bill that would make companies put more money into their pension funds. But Belt worries that some provisions could actually make things worse.

Northwest Airlines and Delta, both bankrupt, want the government to give them 20 years to completely fund their pensions. Belt wonders if either company will still be in business by then. And as more firms are allowed to dump their pensions, and thereby reduce costs, Belt says their competitors are tempted to follow.

Mr. BELT: You've certainly seen some companies and some company executives saying, well, if Acme is able to offload its pension plans, I'm a competitor, you're going to have the federal government basically subsidizing their labor costs on an on-going basis, I'm going to have to do the same things - for competitive reasons.

LANGFITT: The pension problem goes well beyond accounting rules. Most of the deficit has come from aging sectors like steel and airlines, which have been battered by intense competition. But now, even healthy companies are breaking their pension promises.

Firms like Verizon and IBM have frozen benefits. They're replacing defined payments with 401k plans, which place the risk on employees. Belt says that money-saving strategy could cost companies more later.

Mr. BELT: I think companies may be myopic in their current thinking about these issues, and they're going to be in a position where, 10, 15, 20 years down the road they're going to have a bunch of 60 and 65 year old workers that have only 401k plans, that don't have that stable income stream, and the employees are going to understand that they don't have enough money to retire on. They're going to want to stay.

LANGFITT: Companies won't be able to toss them out on the street because of age discrimination laws.

In addition to the corporate pension problems, Belt says most people just aren't saving enough on their own for retirement.

Mr. BELT: If a couple reaches age 65, there's a one-in-two chance that one of them will live to be age 92 and a one-in-four chance that one of them will live to be age 97. Now how many people are setting aside enough resources to live for another 30-some years? Probably not too many.

LANGFITT: Belt says his decision to leave had nothing to do with his agency's ballooning deficit or the wrangling over a solution on Capital Hill. Instead he says, it was about money. His agency position tops out at $152,000 a year. Belt, who's 47, says he needs to make more in the private sector to put his two daughters through school.

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